MBTA struggles to deal with massive debt

Tuesday

Massachusetts' public transit agency is considering new measures in an effort to resolve the beleaguered organization’s $5.2 billion in debt and $275 million in revenue shortfalls since 2000.

Massachusetts' public transit agency is considering new measures in an effort to resolve the beleaguered organization’s $5.2 billion in debt and $275 million in revenue shortfalls since 2000.

An MBTA document released early this month, “Your service, your choice,” outlines two possible solutions:
- A 19.5 percent overall fare increase for riders.
- A laundry list of service reductions across the state.
Also included in the document are 13 planned public workshops scheduled throughout August during which T riders can voice concerns of an increased fare proposal before a decision is reached on Sept. 4. The fare hikes will take place two to three months after approval.
Lydia Rivera, an MBTA press representative, was quick to underline that the MBTA is not ready to act without public involvement.
“These are just proposals, what-ifs and ideas we can review together,” Rivera said.
Although the MBTA is encouraging public involvement, Lee H. Matsueda of the T Riders Union said state legislators and TRU members were “baffled” at the timing of the workshops, which he said fall at a time when college students, who make up a large number of T riders, will be out of state. He also noted that the state Legislature will not be in session during the decision-making process.
“We want people to speak up and know about the hearings. We are going to be asking the MBTA board to strongly consider postponing the actual hearings until we have our student population back,” Matsueda said.
According to Paul Regan, executive director of the MBTA Advisory Board, an independent municipally funded organization responsible for MBTA budgetary oversight, the financial crunch currently faced by the MBTA began in 2000 with the state’s forward funding bill.
The 2000 legislation that made the MBTA a financially independent state organ also saddled the organization with $3.3 billion in previously state-held debt, half of which was associated with Big Dig highway projects unrelated to the MBTA.
The MBTA Advisory Board cites this financial burden as a major roadblock, declaring in an April report that the MBTA was effectively “born broke.”
As a result of this debt, Regan said, “almost one-third of the T’s $1.5 billion budget goes towards debt service, which is by far the largest debt service of any transit system in the country. The average is around 10 percent.”
In addition to debt transfer, the 2000 forward funding bill earmarked 20 percent of all state sales tax revenue for MBTA and providing more than half of all MBTA funding. Revenue from this source, which was expected to grow by 3 percent annually, has instead averaged a 1 percent annual increase and is projected to hold flat for fiscal 2010, creating a $275 million deficit in revenue since 2000.
Regan also cites infrastructure repair and maintenance as a contributing factor.
“One of the things most people don’t recognize is that in 2000, the T was a very old system. There hadn’t been a lot of money spent on routine maintenance. Lots of money had been spent on expansion and enhancement of service, but the basics had been ignored for a long time,” Regan said.
Currently, the MBTA faces a $2.7 billion backlog in repair projects and budgets $470 million in repairs annually to maintain normal service. Regan’s organization found that an additional $100 million must be spent annually if the MBTA hopes to end this backlog.
“$470 [million] allows them to tread water,” Regan said. “It doesn’t make things any better or worse.”
While the MBTA plans to leave the final decision between service cuts and fare increases to riders, their own proposals favor a fare increase, which could net a projected $69 million in additional revenue, while service cuts would provide an additional $55 million due to the loss of customers as various lines are discontinued.
The Advisory Board produced similar findings in regards to service cuts, since the actual construction of subway and bus stops carry the largest price tags, while service cuts will only marginally decrease labor fees associated with their continued operation.
“You really have to take a meat axe to service to see any significant changes,” Regan said. “There’s little resale value in [MBTA-owned] properties.”
The T Riders Union agreed, underlining that MBTA service cuts would open the door for private contractors to take up old lines.
“It’s very difficult for riders when you have multiple companies operating a transit system. It makes the system less accountable without guaranteeing better service,” Matsueda said.
TRU is encouraging residents to attend proposal hearings in an attempt to involve state legislators in the debate, suggesting that additional state revenue should be funneled into the transit system.
“This is a public service,” Matsueda said. “The MBTA and public transit should be a public system funded by taxpayer dollars because for many people, it’s our only way of getting around.”
Boston Mayor Thomas Menino commented on proposed fare increases in a recent letter to MBTA General Manager Daniel A. Grabauskas, calling the increase “an unsustainable cost for many Boston residents,” while commending Gov. Deval Patrick’s efforts to “reform our transportation system before throwing new revenue into a broken system.”
In the letter, Menino said service cuts would prevent people working late-night shifts from reaching their jobs, and suggested the state should “identify a sustainable funding source for the MBTA,” and declared raising the state gas tax as the best solution for funding shortages.
According to the MBTA Advisory Board, the MBTA is the New England region’s largest consumer of diesel fuel, so actual gains made by the proposed gas tax are unclear.
Local representatives are also speaking out strongly in regards to the MBTA proposals.
District 9 City Councilor Mark Ciommo said, “Considering the difficult financial challenges that many people are facing, now is not the time to raise MBTA fares. A fare increase is not in the best interests of my constituents, nor will it benefit MBTA users. The MBTA should work on increasing its ridership, not its fares.”
District 5 City Councilor John Tobin also weighed in, saying, “The MBTA has an enormous effect on the people of my community. The people hurt the most are the people who rely on the T to go to work, people trying to do the right thing by not consuming fuel and clogging up the roads. Those are the people who suffer."

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